Amid global trade uncertainties, India needs to up its game in the GCC zone—a well-thought-out FTA is the need of the hour, which will solidify the partnership, unlocking new opportunities for mutual economic growth!
With India’s markets in the US and Europe clouded by possibilities of higher tariff walls and other issues, New Delhi possibly needs to think afresh to renew its engagement with the Gulf countries. This zone, which has witnessed significant growth in recent years due to its geographical proximity, complementary economic structures, and shared interests in technology and innovation, promises new trade growth possibilities.
India has four big export markets – North America, Europe, the Gulf and East Asia. With the US likely to become more inward-looking, raising tariff walls against a host of nations and Europe, beset with its economic woes, likely to also revisit tariffs, India perhaps needs to look at other markets more seriously.
The Gulf Corporation Council (GCC) is one of India’s largest trading partners, with bilateral trade exceeding US$ 161.59 billion in 2024, reflecting significant growth driven by enhanced cooperation in various sectors.
India has strengthened its engagement with the Gulf Cooperation Council (GCC) countries through several high-level visits and strategic initiatives. Both sides are working toward more robust economic and strategic partnerships, making the relationship a cornerstone of India’s Look West policy and the GCC’s diversification strategies.
Key Indian exports include petroleum products, machinery, textiles and chemicals, while imports primarily comprise crude oil, natural gas and petrochemical products. Energy security is a cornerstone of the relationship, with countries like Saudi Arabia and the UAE being key suppliers.
The relationship is driven by energy security, growing trade volumes, and deepening bilateral ties.
Significant investments in infrastructure, real estate, ports, logistics, and start-ups are being made by Saudi Aramco, which has pledged US$ 100 billion in diversified sectors such as energy, technology, and infrastructure.
Sovereign wealth funds like the Abu Dhabi Investment Authority (ADIA) and Saudi Arabia’s Public Investment Fund (PIF) have also invest heavily in India’s infrastructure, start-ups and financial services.
In October 2024, ADIA commenced operations in India’s Gujarat International Finance Tec-City (GIFT City), aiming to bolster infrastructure, hydrocarbons and technology investments. Indian companies like ONGC Videsh and Indian Oil Corporation have stakes in oil and gas projects in GCC countries.
What’s Next
The potential for growth lies in expanding collaboration in technology, renewable energy, infrastructure, and defence.
India and GCC are exploring clean energy partnerships, climate tech, and ESG standards. A successfully negotiated Free Trade Agreement would further solidify this partnership, unlocking new opportunities for mutual economic growth.
Even the implementation of the India-UAE CEPA in 2022 has streamlined trade processes and increased market access. Efforts to finalise a similar Comprehensive Economic Partnership Agreement with Saudi Arabia are underway, focusing on trade facilitation and investment protection.
Initiatives like Saudi Vision 2030 and the UAE’s long-term development strategies are reducing reliance on oil by fostering sectors like tourism, manufacturing, logistics, and technology.
GCC nations are attracting foreign direct investments (FDI) by improving ease of business, infrastructure, and economic reforms. India and the GCC align on tech innovations, including Islamic finance and digital payment platforms.
With growing convergence in technology, infrastructure, and trade, businesses in India and the GCC benefit from increased collaboration.
The GCC remains India’s largest energy supplier, contributing over 60 per cent of the country’s crude oil and a significant portion of LNG imports. The policy has strengthened India’s commitment to long-term energy contracts with GCC nations, investing in Indian energy infrastructure and partnering with GCC nations in renewable energy projects.
The GCC is situated at a crossroads of global trade routes, connecting Asia, Europe and Africa.
India’s active role in ensuring the safety of critical trade routes, such as the Strait of Hormuz and the Indian Ocean, and its expertise in cybersecurity and counter-terrorism have strengthened GCC security frameworks. India’s neutrality in regional conflicts allows GCC nations to engage with India without compromising their alliances.
Additionally, the nine-million-strong Indian expatriate community forms the backbone of the GCC’s labour force, particularly in construction, healthcare, and IT. GCC nations have benefited from remittances sent home by Indian workers, bolstering their economic linkages with India.
When it comes to soft power, Bollywood and Indian cuisine have made a significant presence in GCC nations, further solidifying cultural connections. In 2024, Prime Minister Modi visited Abu Dhabi, inaugurating the BAPS Hindu Mandir and engaging in substantive bilateral discussions to enhance cultural ties.
GCC nations are also increasingly collaborating with Indian universities and educational institutions to improve workforce skills. India’s energy transition and focus on renewable energy could reduce its dependency on GCC oil in the long term, impacting GCC revenues.
Furthermore, India conducts joint military exercises, offers training programmes, and has defence agreements with GCC members like Oman and the UAE. Both sides also engage in intelligence sharing and joint efforts to combat terrorism, radicalisation and organised crime.
India’s focus on cybersecurity has led to partnerships with GCC nations to address emerging threats. The GCC remains a key energy supplier to India, with increased collaboration in the oil and gas sectors alongside a significant push towards renewable energy projects, reflecting a mutual commitment to sustainability and green technology.
These engagements underscore India’s dedication to deepening its strategic partnership with the GCC countries, concentrating on economic collaboration, cultural exchange and regional security.
The Kochi Dialogue 2025, held earlier this month, is another significant move to bolster and celebrate the growing relationship between India and GCC.
This article was originally published in The Secretariat.
D Dhanuraj is Founder-Chairman of the Centre for Public Policy Research (CPPR), a non-profit, independent public policy think-tank. Gazi Hassan is a Research Scholar of International Politics and is focused on Indo-Pacific dynamics.
Views expressed by the authors are personal and need not reflect or represent the views of the Centre for Public Policy Research.
Dr Dhanuraj is the Chairman of CPPR. His core areas of expertise are in international relations, urbanisation, urban transport & infrastructure, education, health, livelihood, law, and election analysis. He can be contacted by email at [email protected] or on Twitter @dhanuraj.
Gazi Hassan is a Research Scholar of International Politics at CPPR, focused on Indo-Pacific dynamics. He has an MPhil in International Studies (Jamia Millia Islamia) and an MA in Peace Building and Conflict Analysis (Nelson Mandela Centre for Peace and Conflict Resolution, JMI).